Foreign investment in KSA doubles in vote of confidence for reforms

Economy and planning minister Mohammed Al-Tuwaijri at a forum in Riyadh a day after the 2019 budget was announced. (SPA)
Updated 20 December 2018
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Foreign investment in KSA doubles in vote of confidence for reforms

  • Five sectors of the economy are prepared for privatisation in the first quarter of 2019
  • Ministers attend forum a day after the 2019 budget was announced

RIYADH: Foreign investment in Saudi Arabia more than doubled in 2018 to reach $3.5 billion, the economy and planning minister said on Wednesday.

Mohammed Al-Tuwaijri said the value of investments rose 110 percent from the previous year. 

The minister was speaking a day after the 2019 budget was announced, in which the government said it would boost spending by 7 percent to spur economic growth.

Attracting foreign investment is a key part of the Vision 2030 plan to diversify the economy away from oil revenues. Sending a message of reassurance to private-sector firms looking for business in the Kingdom, Al-Tuwaijri said that historical overdue payments owed by the government to contractors would be settled “within months.”

The crash in oil prices from mid-2014 forced the government to slash some projects and delay payments, while disputes have held up some other settlements.

The vast majority of claims have now been addressed, and Al-Tuwaijri said the rest of the settlements would be made imminently.

“The commitment is there, funding is there, the policymakers are saying ‘please do, please pay, get this out of the way.’ And I think it’s a matter of months before we achieve all of that,” Al-Tuwaijri told Arab News.

Finance Minister Mohammed Al-Jadaan said at the same conference that the government issued more than 700 licenses for foreign investments this year, double the number in 2017.

Al-Jadaan said that Saudi Arabia has no intention of changing its policy on expatriate worker fees — which could prove a stumbling block to attracting foreign companies.

The levies are due to rise next year as part of a policy to encourage the hiring of Saudi nationals.

The ministers were speaking at a post-budget forum, after Saudi officials unveiled a plan to increase state spending to $295 billion.

Some analysts expressed reservations about the budget’s revenue numbers, and claimed that they were based on over-optimistic forecasts for oil prices. 

Al-Jadaan declined to specify what oil price the Saudi budget is based upon. But he told Arab News that the projections laid out were attainable. “We stress-tested various scenarios on the oil price under the budget, and what we have put is actually a reasonable projection,” Al-Jadaan said. “It is a very realistic budget.”


Oil prices climb as Saudi capacity cushions impact

Updated 20 September 2019

Oil prices climb as Saudi capacity cushions impact

  • Kingdom pledges return to capacity by end of November as Kuwait strengthens security for oil sector

LONDON: Oil prices gained on Thursday, supported by supply risks as the market assesses the fallout from last weekend’s drone attacks on Saudi oil
infrastructure.

Brent crude futures gained $1.78 to $63.80 a barrel, while US West Texas Intermediate crude was up $1.28 at $58.40 a barrel.

The attacks knocked out around half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.

“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

HIGHLIGHTS

• US to impose more sanctions on Iran.

• Cushing stocks at lowest since October, 2018.

• Global excess capacity at low level.

The Kingdom said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months,” consultancy Energy Aspects said.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by Iran.

US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.

Iran warned President Trump against being dragged into all-out war in the Middle East.

US Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait’s oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said.

Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.

Stockpiles of crude in the US the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.